13 October 2022

EFRAG trimming pollution standards

EFRAG's Sustainability Reporting Board (SRB) was presented with a proposal by the EFRAG Sustainability Reporting Technical Expert Group (SR TEG) to reduce the reporting burden for companies to comply with ESRS E2.

Julie Marie, SR TEG member and sustainability director at Deloitte in France, presented the proposal to merge and trim disclosure requirements (DRs) in response to feedback from the consultation on the ESRS exposure drafts which said that the standards would be too burdensome.

The proposal would make DR E2-4 (pollution to air, water and soil) less granular.

DR E2-5 (Substances of concern and most harmful) would be subject to a materiality assessment meaning many entities would discard it.

Where site information was required, it will now only have to be reported when material.

DR E2-6 (Pollution-related incidents and deposit impacts and risks, and financial exposure to the undertaking) would phase in quantitative reporting and be merged with DR E2-7 (Potential financial effects from pollution related impacts, risks and opportunities).

Marie said that the biggest debate at the SR TEG meeting was over whether to keep the standard as sector-agnostic but it was decided that it should remain to ensure continuity from the Sustainable Finance Disclosure Regulation (SFDR).

As with the other environmental standards, the board will vote on the proposal at a later date once all the specific data points in the proposal have been finalised.